Hello, International Tycoons and Companies! Please Proceed and Take Legal Action Against the UK for Vast Sums.

What is your reckon our political system operates? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. The law is upheld by the courts. That's it. However, that was how it once functioned. No longer.

The Advent of Secret Arbitration Panels

Today, international firms, or the billionaires that control them, have the power to sue nation states for the policies they pass, at offshore tribunals composed of business advocates. The cases are conducted away from public scrutiny. In contrast to domestic courts, these panels allow no opportunity to appeal or legal review. The general public are unable to file a case to them, nor can our government, or even companies operating from this country. The door is open exclusively to businesses registered abroad.

When a secret court determines that a legislative action could harm the corporation’s expected profits, it can award compensation of vast sums, running into billions.

These sums represent not actual losses but money the arbitrators determine the company could potentially have made. The state may have to drop the legislation. It becomes deterred from passing future laws in that area, for fear of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being initiated, as corporations take cues from each other, and private equity fund legal actions in exchange for a share of the awards. The consequence? Sovereignty and democracy are now too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the rulings taken by parliaments is that this provision has been inserted – without democratic mandate, and often in an atmosphere of profound opacity – within bilateral investment treaties.

A Real-World Instance: The Whitehaven Coal Mine

Last year, a conservation group secured a significant win at the senior court. The presiding officer found that schemes to dig the first deep coalmine in the UK for a generation, in Cumbria, were found to be unlawfully approved by the previous government, which had agreed to the questionable argument that the mine would have had no impact on our carbon budgets. The incoming administration then withdrew the consent the Tories had issued. Today, this success could be compromised by an offshore tribunal accountable to no one but the corporations petitioning it.

During August, a firm whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the United States was established to hear it.

This firm is seeking compensation from the UK for the profits it would have generated if the mine had received permission to go ahead. Citizens have no clear indication how much this could amount to. Which individual is serving as its counsel against the UK administration? A sitting MP, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The state makes a decision, the domestic court validates it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a elected official works for its behalf.

A Sanctions Case

On the same day that the panel on the coalmine case was convened, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. The public knows nothing of the case so far, but it appears probable that he may employ the tribunal to fight the sanctions the UK imposed on him following the invasion of Ukraine. He has already initiated proceedings against a small nation on these grounds, demanding sixteen billion dollars: an amount representing half state's yearly income. Part of the legal team representing him there? Cherie Blair, married to the previous PM.

Legal experts believe that the EU’s delay in using frozen oligarchs' funds as security for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, unaccountable authority over elected governments may be obstructing the money Ukraine critically depends on.

False Assurances and Growing Threats

We were assured that these events could not occur. Years ago, a former prime minister, championing the most significant and hazardous of all these agreements, stated: “We’ve signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this matter labelled activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries should be concerned by ISDS claims. Warnings that “when companies start to realise the influence bestowed upon them, they will redirect their efforts from the weak nations to the developed economies” were dismissed with general mockery.

That threat is now a reality. This year, fossil fuel and extraction companies have filed a historic level of claims against nations both wealthy and developing, challenging – similar to the Cumbrian coalmine – official measures to prevent environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP